Debt-saddled Lai Sun Development sells stake in insurer AIA Group’s Hong Kong headquarters

A wholly-owned unit of Lai Sun Development Company, a Hong Kong property firm, has sold its equity stake in the AIA Central skyscraper for HK$1.42 billion (US$180 million) in a bid to boost its liquidity.

The move comes just a few weeks after the developer disposed of its interest in an industrial building in the city as it tries to overturn a mountain of debt.

The 38-storey office tower at 1 Connaught Road Central has served as the regional headquarters of Asia’s biggest insurer since 2005.

Peakflow Profits is a wholly-owned subsidiary of Lai Sun Development and an indirect, non-wholly-owned unit of Lai Sun Garment (International), according to an exchange filing.

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AIA Group will hold the remaining equity stake in Bayshore Development after the disposal.

The proceeds of the sale will go towards repayment of bank loans and general working capital for Lai Sun Development, the companies said in a statement.

Lai Sun Development was saddled with total liabilities of more than HK$34.69 billion for the six months ended January 31, according to its interim results.

Each of the Lai Sun units is expected to record a loss of about HK$154.6 million on the disposal, according to the filing to the Hong Kong stock exchange.

In mid-March, Lai Sun Development sold some of its property assets in the Wyler Centre Phase II, an industrial building in Kwai Chung, including the 20th floor and its parking spaces on the second floor, for HK$80 million – an estimated loss of HK$6 million.

The company said in a filing on March 15 that the sale represented its “commitment to its noncore asset disposal plan” aimed at enabling it to reallocate more financial resources to capital structure enhancement.